France’s largest car maker has published extremely bold growth plans. Investors have been here before

While General Motors is retreating to its lucrative but shrinking home market, Renault is pinning extravagant hopes on emerging-markets growth.

France’s largest car maker expects a flat European market through 2022, according to a fresh six-year plan unveiled Friday. Outside Europe, however, it plans to double sales. By the end of the period Europe should account for less than two-fifths of unit sales, compared with 52% last year, and less than half of operating profit, compared with roughly three-quarters now. Renault wants investors to see a play not on stagnant Europe, but on exciting growth markets.

The targets are extremely bold. The company wants to sell at least 9% more cars every year in Latin America and Eurasia, a region that roughly equates to the former Soviet bloc. Both regional markets have been shrinking, which at least gives them scope to bounce back.

In Africa, the Middle East and India, Renault’s implied target is 8%, underpinned by bullish plans in India—a market GM is quitting—and Iran. Total vehicle sales in these regions have risen by just 1% a year for the past six years, according to data from the International Organization of Motor Vehicle Manufacturers, or OICA, after its French name.

The Asia-Pacific market has grown by almost 6% a year over the same period, according to OICA data. Renault now expects to boost its own unit sales by an eye-watering 27% a year, underpinned by a sixteen-fold increase in the vast but increasingly crowded Chinese market.

The company has a record of missing these kinds of targets. Its previous six-year plan, announced in 2011, projected unit sales of at least three million in 2013. Sales in 2013 turned out to be 2.6 million, and the company only passed the three million mark last year.

The 2011 plan also included an infamous electric-vehicle, or EV, target that turned out to be wildly optimistic. Now that EV sales have more momentum, the company’s premature investments could finally come good. “Our competitors will have startup pains,” said Gilles Normand, senior vice president for EVs, alluding to the aggressive launch schedules laid out by the likes of
Volkswagen,
GM and Ford.

Tellingly, however, Renault didn’t publish a fresh EV sales target. In a tightening regulatory environment for emissions, its much vaunted first-mover advantage seems to be less about taking market share with must-have products than preserving margins on must-make ones.

Investors don’t much buy the vision. On less than six times earnings, Renault is the cheapest of all global car stocks. A fanciful set of long-dated growth targets isn’t likely to change that.